Estimated tax payments - adjust payments based on quarterly income?

[Frank nKansas]

In January, 2023, I received a one-time lump sum payout of long term capital gains.  Neither Federal nor Missouri tax was withheld by the payer. 

To avoid IRS and state penalties, do I have to make the first quarter's estimated tax payments sufficient to cover the anticipated tax due for the first quarter and then pay 'normal' estimated payments for the remaining three quarters.  Or can I divide the four estimated tax payments evenly throughout the year?

My income for 2023 will equal that of 2022 except for the lump sum payment received.

Thank you!

Frank

[robtm]

You can do either one. Make a larger estimated tax payment (both federal and state) for the first quarter or spread it out over all four quarters. Just so at the end of the year you have paid enough estimated taxes to avoid an underpayment penalty. 

[MonikaK1]

You can either pay all of the estimated tax on the one-time payment along with any previously-calculated quarterly amount in the first quarter, or you can use TurboTax to prepare estimated tax forms for 2023 and include the one-time payment in your estimated income for 2023.

When you prepare your 2023 return, you can also use the annualized method at that time if it will reduce any calculated underestimated tax penalty.

TurboTax's TaxCaster is available without opening your return and will estimate your total taxes for 2023. This will help you determine the amount you should pay each quarter. See the discussion in this thread for more information.

There are a number of tools you can use to calculate your estimated taxes for 2023.

When you prepare your 2022 return, TurboTax will automatically calculate your 2023 estimated tax payments and prepare 1040-ES vouchers if we think you may be at risk for an underpayment penalty next year.

You can also calculate your 2023 estimated taxes and generate the payment vouchers by following the steps below. You will need to wait until your filed return is processed (payment acknowledged / refund received) before reentering your return. See here for the process to open/amend a return that has been filed.

To calculate estimated taxes and prepare Forms 1040-ES:

1. With your tax return open, search for 1040-es (be sure to include the dash) and select the Jump to link
2. Answer No to the question Do you want to change your W-4 withholdings for 2023?
3. Answer the questions about things like your 2023 filing status, income, and deductions
4. Eventually, you'll come to the Print Vouchers? screen. Answer Yes and we'll include your 2023 1040-ES payment vouchers when you print a copy of your return later

You can also use the IRS Withholding Estimator to calculate amounts to be withheld from wages.